Ultrafast Google Fiber seeks to expand in 9 metro areas

By Brandon Bailey, Mercury News

Posted:
02/20/2014 07:55:30 AM MST

Updated:
02/20/2014 07:55:32 AM MST

(Mercury News)

MOUNTAIN VIEW — Google announced Wednesday that it has invited 33 cities around the country to begin talks on joining the ultrafast home Internet service known as Google Fiber, in a move that promises gigabit-speed downloads to millions of consumers while transforming a former sideline into a substantial business for the giant tech company.

Google's invitation was welcomed with enthusiasm by officials in the Silicon Valley cities on the list, which includes San Jose, Palo Alto, Mountain View, Sunnyvale and Santa Clara. “Having the ability to get this kind of bandwidth would be huge for our residents,” said Sunnyvale Mayor Jim Griffith. The service could start in some cities as early as next year.

Delivering home Internet service is a big leap away from Google's primary business of selling digital ads. But analysts say Google's ad business benefits from anything that encourages more Internet use.

For its part, Google contends that faster Internet speeds are necessary for developers and companies to create the next generation of online services — much as broadband Internet service opened the door to games and apps that never existed in the dial-up era.

“The future of the Internet will be built on gigabit speeds,” said Google Fiber General Manager Kevin Lo in an interview. “We're going to do our part to help move the web forward.”

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Google Fiber promises Internet downloads much faster than premium speeds offered by cable providers, and up to 100 times faster than typical consumer Internet service in the United States. Google also offers an optional cable-style television package with the service. While the company said it has not decided pricing in other cities, it charges $70 a month for a 1-gigabit connection, without TV, in Kansas City, where it first rolled out the service.

After launching Google Fiber in Kansas City two years ago, and adding two more cities last year, Google now wants to discuss building and operating fiber networks in clusters of cities around the country including Phoenix, Atlanta, Salt Lake City, Portland, Ore., Nashville, San Antonio, Texas and neighboring towns.

“It would be great for our residents to have really fast Internet service,” said San Jose Mayor Chuck Reed. On a national level, he added, “high-speed Internet access is one of the things we need for economic development. The U.S. generally is far behind other parts of the world.”

Google has declined to release subscriber numbers or other financial details from its current Google Fiber operations. When asked if the service is profitable, Lo would only say, “Clearly, fiber can be a good business.”

But in response to other questions, Lo indicated the company was pleased with consumer demand in Kansas City, as well as in Austin, Texas and Provo, Utah, where Google Fiber began signing up customers last year.

If Google expands to all 34 cities, it would serve about 10 percent of U.S. consumers, said Susan Crawford, a visiting law professor at Harvard who studies telecommunications and Internet access. That may not be a huge threat to major telecommunications companies, but industry analyst Jeff Kagan noted that Google's effort has already prompted AT&T to offer a competing gigabit fiber service in Austin. AT&T says it's also considering other cities.

Ultimately, some of the cities approached by Google may not qualify or could decide not to participate in Google Fiber, but Lo said the company “absolutely” wants to add all 34 if possible.

Google selected the cities from more than 1,000 that submitted applications four years ago, when the company first announced plans to build a high-speed municipal network as both an experiment and an example to the industry and policymakers.

Leaders in all 34 communities have shown a strong interest in improving Internet access, said Google spokeswoman Jenna Wandres. That's important because, while the company isn't asking for direct financial subsidies, Google is counting on local officials to pave the way on several points.

Over the next few months, Google will ask the cities for detailed reports on housing density, topography, geology and current locations of utility poles and underground conduits. Google may also want help obtaining rights to use existing poles or conduits, for which Lo said the company is willing to pay “market rates,” rather than spend more to install new ones.

Lo said Google also wants cities to show they can process a large volume of permits once installation begins, which could mean hiring or assigning inspectors to the project, so the company can move quickly and on a predictable schedule.

Google has negotiated licensing rights to offer a package of cable television channels to Fiber subscribers, priced competitively with cable company offerings. Lo said Google did so because consumers are used to buying cable and Internet service together.

The television service may give Google new opportunities to show video ads, although Wandres said Google doesn't currently do so. Analysts say the fiber service may also provide data on Internet user habits.

Those may be long-term benefits for Google, said Bernstein Research analyst Carlos Kirjner. But he said Google's expansion plans show the company is serious about operating Google Fiber as “a real business” that's profitable on its own.

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